Cautious equities trading seen to continue this week
Local stocks may remain under pressure this week after the benchmark Philippine Stock Exchange Index (PSEi) slipped below the key 6,000 level, reflecting cautious sentiment amid global and domestic risks.
Stock brokerage 2TradeAsia sees immediate support at 5,800, with resistance at 6,050 and a secondary ceiling at 6,300.
Philstocks financial research manager Japhet Tantiangco said that despite being at a bargain, the local market is still seen to have a bearish bias in this week’s trading.
“Lingering uncertainties on the Middle East war amid the lack of a compromise among the countries involved and the expectations of rising inflation and interest rates at home are expected to continue weighing on sentiment,” Tantiangco said.
“The peso’s weakness, if sustained, is also expected to negatively affect the local bourse. Still, the market’s bearish default could be negated if we see positive developments in the geopolitical tensions in the Middle East.”
The PSEi closed on Friday at 5,943, down 0.93 percent week-on-week, as investors reacted to higher interest rates and lingering geopolitical tensions.
The brokerage said that the downside was triggered by the Bangko Sentral ng Pilipinas’ hawkish 25-basis-point rate hike to 4.5 percent, aimed at containing inflation fueled by rising oil prices.
Global headwinds also weighed on sentiment, particularly tensions in the Middle East and disruptions along the Strait of Hormuz, which continue to drive volatility in Brent and WTI crude.
2TradeAsia noted that capital flows are shifting toward defensive investments in upstream and downstream oil infrastructure, as energy assets become key cash flow anchors.
Trading activity remained thin, with average turnover falling to P5.16 billion, while foreign investors stayed net sellers with outflows of about P496 million.
Market breadth was negative, with decliners outpacing advancers, 102 to 92, signaling weak participation across sectors.
Financials and property counters led the decline, dropping 3.4 percent and 1.95 percent, respectively, even as some sectors posted modest gains.
The brokerage said tighter financial conditions could persist through 2027, as the BSP’s policy shift marks the end of its easing cycle.
At the same time, inflation risks remain elevated due to potential El Niño impact on food supply and higher utility costs.
